Milken Says His Junk Bonds Mean `Freedom` For Smaller Companies

June 23, 1989

Michael Milken, who resigned last week from Drexel Burnham Lambert Inc. to avoid certain dismissal, insists he has been misrepresented to the public and that his departure means many small firms won`t find the financial help they need.

``You wonder who they are writing about,`` he told Reuters in a rare interview, referring to reports of his career and federal indictment on racketeering and securities fraud charges. ``After spending your whole life trying to help people, you can`t believe it.``

Milken spoke to Reuters during a visit this week to Indianapolis, where a group, 100 Black Men of America, made him the first recipient of the Marcus Garvey Award for Economic Freedom. Milken was given the award, named after the black nationalist leader who died in 1940, for his role in helping small, black-owned businesses arrange financing.

But Milken would not discuss substantive issues, particularly his legal problems, deferring largely to his wife, Lori. ``He`s got smart genes,`` Lori Milken said. ``He can`t fix a radio, but in his field he can do anything.``

Milken described that field as helping businesses, particularly those that are small or owned by minorities, grow. He tried to draw analogies from Hollywood.

``It`s like the movie `Star Wars,` when Princess Leia`s planet blows up and Obie-Wan Kenobi feels the force of all these voices calling for help,``

Milken told Reuters. ``I feel like there are thousands of companies out there asking for help.``

Today Milken faces 98 federal charges, ranging from cheating clients and stockholders by engaging in insider trading and market manipulation to fraudulent trading to create false tax losses. Federal prosecutors say Milken tricked one company into agreeing to be taken over.

Milken said his opposition is missing the complete picture.

``High-yield bonds are freedom for companies in need of long-term financing,`` he said, adding that small companies are likely to need such a mechanism.

``What you`re saying is that small companies shouldn`t be allowed to do the same things as large companies,`` Milken said.

He acknowledged that the high-yield bonds became a tool to finance some unpopular corporate raids and takeovers, but said that`s not a convincing argument against the bonds.

``We`re all upset with change. It`s like being a gardener. You have to prune the bush to make it grow. It`s painful, but sometimes things have to change.``

Milken has started his own consulting firm in Los Angeles, called International Capital Access Group, but admitted he regrets being forced out of Drexel. He joined the Wall Street investment banker in 1970, fresh out of the University of Pennsylvania`s Wharton School of Business.